Uralkali CEO Moved From KGB Prison to Belarus House Arrest

By Yuliya Fedorinova and Aliaksandr Kudrytski -
Sep 26, 2013

Belarus moved OAO Uralkali (URKA) Chief
Executive Officer Vladislav Baumgertner from a KGB prison to a
rented apartment in Minsk in a sign that a dispute that roiled
the $20 billion market for potash may be nearing resolution.

The move by Belarus authorities was “unexpected,”
Baumgertner’s lawyer Alexei Basistov said today by phone. No
decision has been made on seeking more lenient terms of
detention for the 41-year-old, he said.

Baumgertner was arrested a month ago at a Minsk airport
following talks he attended at the invitation of Belarus Prime
Minister Mikhail Myasnikovich over his Russian company’s
withdrawal from the Belarusian Potash Co. trading venture.
Belarus has called for the arrest of Uralkali’s billionaire
shareholder Suleiman Kerimov, who has since held talks on
selling his stake, people familiar with the matter have said.

Belaruskali, Uralkali’s partner in the BPC venture that
controlled 40 percent of global potash exports, has said a
reconciliation won’t be possible unless the Russian company, the
world’s largest producer of the soil nutrient, changes its
strategy or owner.

Russian entrepreneur Vladimir Kogan, a longtime ally of
President Vladimir Putin, is the leading candidate to buy the
billionaires’ Uralkali stake, people said on Sept. 13. Kerimov
has made new demands in talks with Kogan this week, which may
cause attempts to reach a deal to collapse, RIA Novosti
reported, citing an unidentified person familiar with the
situation.

Prokhorov, Gutseriev

Billionaire Mikhail Prokhorov’s Onexim Group is among
potential bidders for Kerimov and his partners’ stakes in
Uralkali, people with direct knowledge of the matter said this
week. Other potential approaches may come from billionaires
Mikhail Gutseriev and Vladimir Evtushenkov, Forbes Russia
reported this month, citing people it didn’t identify.

The Uralkali CEO’s transfer to house arrest became possible
after an investigation of the abuse of office charge against him
was completed, RIA reported earlier, citing Valentin Shayev, the
head of Belarus’s Investigative Committee.

Authorities also considered a plea from Baumgertner’s
relatives, the news service cited Shayev as saying. The
executive was charged in his capacity as chairman of Uralkali’s
former marketing venture with Belarus.

Mother’s Plea

The Uralkali CEO’s mother won his release from prison with
an appeal to Belarusian President Aleksandr Lukashenko, RIA
reported, citing Anna Slavina, a defense attorney, who was
quoted in a statement from the Republican Bar Association in
Minsk.

About 6,000 Uralkali employees signed a letter sent to
Lukashenko, asking the Belarus president to “take measures for
quickest release” of Baumgertner, the company said today.

On July 30, Berezniki-based Uralkali withdrew from the BPC
venture and said it would ramp up production, sending shares of
rival suppliers including Potash Corp. of Saskatchewan Inc. and
Tel Aviv-based Israel Chemicals Ltd. (ICL) tumbling.

A decline in potash prices threatens President Lukashenko,
who has ruled Belarus since 1994, with a drop in foreign
currency needed to meet imports and international debt
obligations. A final payment from a Russian-led $3 billion
bailout loan is planned for this year. The cash is tied to
policy measures, including some state asset sales that haven’t
been carried out.

Good Health

Putin and Lukashenko attended military drills together
today in Grodno, Belarus, and in Russia’s Kaliningrad region,
Kremlin spokesman Dmitry Peskov said. He didn’t know whether the
men discussed Uralkali and declined to comment on Baumgertner’s
house arrest.

Baumgertner is being kept under “surveillance by KGB
operatives” at the apartment, Basistov, his lawyer, said by e-mail.

The executive is allowed visits by close relatives, his
Minsk-based lawyers told reporters in the Belarusian capital
today. He is in good health, has everything he needs and is
approaching his situation positively, said Darya Lipkina, one of
the attorneys. His legal team have no information on whether the
investigation against Baumgertner has ended, said Dmitry
Goryachko, another attorney.